Expanding Universal Health Coverage in The Presence of Informality in Indonesia: Challenges and Policy Implications

Teguh Dartanto, Jahen Rezki, Usman, Chairina Siregar, Hamdan Bintara and Teguh Dartanto ()
Additional contact information
Teguh Dartanto: LPEM, Faculty of Economics and Business, University of Indonesia

No 201511, LPEM FEBUI Working Papers from LPEM, Faculty of Economics and Business, University of Indonesia

Abstract: The implementation of national health insurance in Indonesia since 2014 has brought out the missing middle problem in which the non-poor informal sectors have remained uncovered from the health care due to self-enrollment. Therefore, achieving UHC in Indonesia will take a long process, especially when the proportion of non-poor informal sector in total population is large enough. This study aims at examining three main issues that may have become obstacles for informal sectors to join the program: (1) observing supply side readiness, (2) examining affordable premium and willingness to pay of informal sectors, and (3) exploring why informal workers have been reluctant to join the national health insurance. This study reports that around 53.7% of Sub National Government (SNG) faced a shortage of health facilities of 59,387 beds, though in some regions had surplus of beds (per 1000 people). This study also finds that a single premium for all over Indonesia is unfair and unaffordable for some people living in eastern part of Indonesia. Observing 400 households working in informal sectors and applying Triple Bounded Dichotomies Choice Contingent Valuation Method (TCCVM) to observe the Willingness to Pay (WTP), this study finds that around 70% of respondents had the desire to join the health insurance, but their willingness to pay of the premium was lower than the current rate. The current premium seemed less affordable for informal sectors; thus, this created a barrier for them to enthusiastically join the new health insurance program. Our econometric estimations confirm that availability of hospital, insurance literacy, experiences of inpatients and outpatients, number of family member, sex of head of household, access to internet and household income are highly correlated to the likelihood of informal sectors joining the national health insurance (NHI). Moreover, in contrast with findings from many other studies, the insurance premium is surprisingly not the main reason for informal sectors to join the program; rather, the main obstacle is the lack of insurance literacy. Consequently, the necessary condition for mandating informal sectors to join the program is an improvement of insurance literacy, while the sufficient conditions are supply-side readiness and affordable premium. This study calls for a massive campaign to educate the public about the importance of health insurance.

Keywords: Returns; to; Scale (search for similar items in EconPapers)
JEL-codes: H40 (search for similar items in EconPapers)
Date: 2015-11, Revised 2015-11
New Economics Papers: this item is included in nep-hea, nep-ias, nep-iue and nep-sea
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://lpem.org/repec/lpe/papers/201511.pdf First version, 2007 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lpe:wpaper:201511

Access Statistics for this paper

More papers in LPEM FEBUI Working Papers from LPEM, Faculty of Economics and Business, University of Indonesia Contact information at EDIRC.
Bibliographic data for series maintained by Arianto Patunru ().